Retail Management Process

Retail management involves facilitating Retail operations in such a way as

to benefit both customers and the company. For customers, this means
determining how to deliver value to your audience, both in terms of the
products you sell and the overall experience you provide. On the business
side, you need to be able to do all this without overextending your staff — or
your bank account.

In simple words it can be said that Retail management is the workflow of

regulating and managing a retail store's daily procedures that involve selling
goods and providing customer service. This entails all of the necessary steps
from welcoming customers into the store to finalizing their purchases.

The process of Retail Management aims to boost customer satisfaction and

provide an enjoyable shopping experience. It also ensures that front-office
operations are running smoothly, and the retail business remains profitable.
Retail management members are responsible for a wide range of tasks,
including-

• Keeping updated records of products

• Restocking
• Visual merchandising
• Labeling items
• Resource management
• Customer assistance
• Designating tasks to employees
• Store cleanliness
• Daily sale management reports
• Counting cash drawers

The success of a retail store relies heavily on the productivity and efficiency
of its management. A significant component of effective management is
having competent store managers that oversee employees and daily
activities. With supervision, retail processes run smoothly, customers are
assisted, and issues are immediately addressed.
 Without retail managers on-site, customers may experience elongated wait
times, become frustrated, and abandon their shopping carts. Operations,
such as stocking shelves and layouts, may also suffer, creating a
disorganized workspace and unappealing storefront.

In brief, Retail Management Process involves all those steps which helps
the customers to procure the desired merchandise form the retail stores for
their personal use. It includes all the steps required to bring the customers
into the store and fulfill their buying needs.

Though this isn’t all that easy, it’s not impossible, either.

The following processes are involved in Retail Management Process:

I. Internal planning
II. Procurement
III. Fulfillment
IV. Promotions and sales
V. Sales, service, and support

I. Internal planning

A lot goes on “behind the scenes” within a retail organization. In fact, it’s often
the efforts during this planning stage that allow the customer-facing side of
the retail business to truly shine.

Some factors to consider:

• Staffing: In order to provide a valuable experience to the customers, the

retailer must have a sufficient staff of qualified individuals in place. Store
size and company budget affect the staffing needs to adequately run
internal processes, from stocking to customer service. Often, retailers
begin with the minimum number of workers and hire as needed to save on
labor costs.

Management needs to consider the many positions to fill within the store,
such as stockers, sales representatives, and cashiers. Insufficient staffing
can lead to poorly run operations and unhappy customers, hindering the
 store image and profitability.

Retail management should focus on building team spirit and a friendly

attitude between employees to ensure smooth workflow. When team
members are not working in unison, productivity, and operational efficiency
decrease. Therefore, proper training, human resource management, and
team-building exercises are essential for a healthy work environment,
promoting employee retention and satisfaction.

Implementing an incentive program can also boost morale. Recognizing

top performers, giving bonuses, and evaluating workers for promotions
shows team members that they are valued.

• Market Research: Understanding the ins and outs of the industry, as well
as where your competitors stand.Profitable stores have well-planned retail
marketing strategies and campaigns that promote products in a targeted
way. This requires extensive research on not only the item itself but the
market and competitors as well. When beginning market research,
management should ask themselves-

• What items are available on the market?

• Who are the available vendors for this product?
• What is the growth trend in the respective industry?
• What are the typical expenses with the product?

When these questions are answered, management can successfully separate

their needs and wants. As retailers are the last phase of the supply chain,
they directly interact with the customers and are responsible for delivering
impactful promotions and desired products.

• Logistics: It’s vital that the retailer has a plan for moving the products from
the supplier to the customer — and why the retailer is essential in this
regard.After the products have been selected, retail management must
then find the means to transport the goods from the supplier to the store.
Aside from the physical transportation, the deliverer must be able to meet
 deadlines. Finding a company that falls within budget while providing
prompt deliveries is crucial for successfully executing dependent
operations, such as stocking and fulfillment.

Internal logistics is just as important, as team members should understand

how the size of retail locations impacts how much supply they can store
and showcase. Receiving more products than the establishment can
handle may require extra expenses for additional storage.

• Finances: Overall, the retailer will have to have a clear idea of his
operational costs, as well as his intended profit margins. Budget planning
should thoroughly outline how much revenue a company generates so
management can determine which expenses are necessary. Without a
budget, businesses risk reaching a deficit from overspending.

Beyond purchases and investments, retailers should consider operational

costs, hourly wages, utility bills, rent, and other financial obligations. For
startups, expenses often exceed profits until the business gains
recognition. However, budget planning can determine how long it will be
until the company breaks even.Once the products, logistics, and expenses
are accounted for, management must determine their desired profit
margins to set prices. Retailers must consider what customers are willing
to pay for each product. However, businesses should prepare for the fact
that rates may need to change depending on the demand. Therefore,
setting a minimum profit percentage that can maintain income ensures that
companies can meet financial obligations.

New businesses may need to significantly lower prices to attract buyers

and build a stable clientele. Then once customer retention is established,
management can reevaluate prices to boost profit margins.

Note that these are all things to be done both pre- and post-launch of the
business. Having a solid plan of attack only matters if you stick to it—and
continue to improve—once your store goes live.

By continually evolving own processes as time goes on, the retailer will
always know exactly what needs to be done to keep his business moving in
the right direction.
 • Inventory Control

As the main asset, inventory must be optimized and protected to

secure profitability and longevity. Many retail companies experience
inventory loss from instances such as theft. If merchandise is not
closely monitored, the cost of shrinkage can accumulate, negatively
impacting profits. Therefore, actively regulating and surveilling
products can protect a business from internal and external theft.

There are several other key aspects to proper inventory management,

including-

• Reorder Points - Item stock depletes at different rates depending on

their popularity and demand. Therefore, management must determine
the optimal stock level for each product to promote sales while
minimizing inventory costs. Established businesses have years of stock
data stored in information technology, such as inventory control
software, that calculates reorder points. These are indicators that trigger
reorders when stock volumes dip below the minimal level. However,
startups with limited data should research market turnover to determine
the product's turnover rate.

• Understocking - Inadequate stock preparation can lead to stockouts

and backorders, which can cause a retailer to miss out on sales.

• Overstocking - Excess stock can equally impact a store's profits by

hindering cash flow. Slow-moving items can take up valuable floor and
storage space, adding holding expenses, and reducing operational
efficiency. Overstocked perishable goods can expire, and items with a
sudden influx in demand can quickly go out of style. This requires the
 business to discount items as a last-ditch effort to try to generate some
revenue or discard stock, wasting valuable capital.

II. Procurement/Purchasing/Buying

Procurement means finding a supplier — that is, the right supplier for your
business. When sourcing a supplier, there are a number of factors to
consider, such as:

• The price being offered for the products in question (along with any
discounts or deals the supplier may offer for bulk orders or other
circumstances)
• The quality of service provided by the supplier (i.e., their delivery terms,
level of communication, and their overall reputation)
• The supplier’s credit and payment policy, which can determine how
much stock you’re able to order at a given time

The retailer’s goal is to find a supplier who he shall be able to rely on both
now and in the future. When it comes time to scale, the last thing the retailer
will want is to realize that his current supplier won’t be able to fulfill his
growing needs.

The other side of procurement — once the retailer has found the right
supplier for his retail business — is the actual act of purchasing products for
the purpose of reselling them to the end-user.

As mentioned above, the retailer will have likely agreed to specific terms with
his supplier, nailing down the amount of product being purchased per order,
the cost of each order, as well as how and when he will be expected to remit
payment.

It’s a balancing act for (1) the retailer’s retail operations and (2) his
supplier.

Finally, the retailer will also want to know that his organization has the
capacity to take on the orders being placed. That is, he will need to have:

• Sufficient warehouse space available

• Proper inventory documentation and management
• Sufficient capital on hand to pay for recurring orders as time goes on.
Purchasing merchandise and systems that streamline operations is an
essential step in the retail industry.Some major processes involved in it can
be summarized as follows:

• Sourcing

Utilizing several vendors ensures a retail business has pricing options and
backups if one supplier becomes unreliable. Management needs to
investigate suppliers that meet their company's specific needs, based on
price, delivery times, return policies, discounts, and special requirements.
Choosing the right vendor can potentially start a symbiotic partnership in
which exclusive deals that benefit both parties can be negotiated.

• Procedures

The purchasing process involves many steps that can significantly impact
the business if it is not performed correctly. Therefore, companies should
utilize ordering systems that automate the stock replenishment process to
prevent human error as follows:.

1. Back-Office Systems - By automating back-office systems, such as

record keeping and purchase orders, businesses can streamline the clerical
process. Instead of manually passing order requests through each
department, the software can make documents virtually available to all
relevant stakeholders.

2. Point-of-Sale Software - Point-of-sale (POS) systems streamline

 transactions through payment terminals and provide access to all product
information. However, integrating POS and back-office solutions allows all
business employees to have access to real-time inventory levels. This
ensures that stock levels are always optimized.

III. Fulfillment/Selling

The entire point of operating a retail business is to fulfill orders made by the
end-user — that is, the target customer.

Fulfillment may seem as simple as moving products from Point A to Point B

but the ground-level process is far more involved.

First, develop a systematic procedure to put in place for RECEIVING goods

from the supplier. Whether a business has hired a shipping company to
deliver the stock or collects products directly from the supplier, receiving the
goods is the first step. Once the items are in the retailer's possession, a
thorough quality and quantity check should be conducted to ensure no goods
are damaged or missing. Management should cross-examine the purchase
order, shipping label, invoice, and physical products to ensure everything
has been delivered.
As shipments come in, the retailer will then conduct quality assurance
checks, which will involve:

• Identifying that the correct product(s) have been shipped

• Confirming the order quantity, weight, volume, and other dimensions are
correct
• Checking shipments for damage and/or any other issues that may render
the products worthless

Typically, the next step involves STORING incoming shipments in the

retailer’s warehouse for at least some period of time. After all of the items
are accounted for, management must determine where to store the stock
after shelves are filled. For some businesses, a back-storage room may
suffice, while others may need additional warehouses or third-party facilities
that require holding fees. Regardless of how the stock is held, items should
be organized and easily accessible for when it is time to restock the store.
 Thus,Fulfillment processes encompass:

• Placing products for easy access and safe retrieval

• Documenting and tracking product location to aid in quick retrieval
• Storing shipments so as to maintain product quality as needed (e.g., in
climate-controlled areas)

(As the retailer gains a better understanding of the demand for his products,
he will be able to further systematize these operations. This may involve, for
example, determining his inventory valuation method of choice.)

The next step of fulfillment is, of course, delivery.

This involves doing all of the above (assuring quality, accessibility, etc.) —
but doing so as the retailer transports his products. When delivering to
multiple locations, the retailer will also want to have clear and unobstructed
routes defined so that his shipments are always able to reach their
destination intact and as intended.

Overall, the goal is to minimize the amount of time, energy, and money it
takes to deliver products where they need to go — and minimizing the
chances of having things go wrong along the way.

IV. Promotions and sales

Products should be grouped and placed where customers can easily see
and grab them. Items should also be arranged next to similar products, such
as shampoo, conditioner, and hair accessories. This not only streamlines the
buyer's shopping experience but prompts additional purchases as well.
Once the retailer’s products are ready to be displayed in-store (or on his
eCommerce website), he can then present them in a way that clearly
communicates their value to the customers.

This process, known as visual merchandising, will look very different

depending on the type of retail store that the retailer runs and the type of
products that he sells. For example, fashion retailers often showcase entire
outfits, rather than individual articles of clothing:
Source: Fashion retailer Magnum’s display in its London location.

Supermarkets, on the other hand, will display similar — but not identical —
products together.

There’s no “one way” to go about merchandising; the retailer can implement

multiple merchandising strategies at a single time throughout the store if
 need be. Whatever be his approach, the aim is to put the products in the best
light possible, so that they virtually sell themselves.

V. Sales, service, and support

The products won’t always “sell themselves,” no matter how effective the
approach to merchandising may be.

This is why talented salespeople and support staff need to be on the ground,
ready to help the in-store or online customers at a moment’s notice.

For customers in the preliminary stages of the buyer’s journey, the staff
should be able to:

• Help them navigate the store effectively

• Uncover the customer requirements and guide them to the best-fit product
• Provide additional information on said products (e.g., price, specifications,
etc.)

It’s also important for the sales team members to promote other products
that will supplement the customer’s overall experience. Whether upselling,
cross-selling, or even downselling a given customer, provide the exact value
they’re looking to get from the retailer — and getting them to provide as much
value to the company as possible.

Besides determining pricing strategies, retail managers must ensure that all
price tags display the correct cost. If a full-cost item is placed in an aisle with
a promotional discount, customers may become agitated at checkout when
they discover the item is more expensive than they were led to believe.
These types of events can decrease customer satisfaction and trust.

It’s also essential that the retailer has staff on hand to help dissatisfied
customers overcome any problems they may have with the products or
services. In some cases, this may mean proactively attending to customers
who appear to be in need of assistance; in others, the team might want to
take a step back and only provide assistance as requested.
Meet the customer where they want to be met, doing whatever the retailer
can to enhance their experience with his brand, and keep them moving
forward in their buyer’s journey.

This last stage of retail management relating to finalization of customer

purchases is very important as a company's profitability solely depends on
how well they can market and sell their products. There are a few ways
management can enhance their retail sale-

1. In-Store Help

Often times, customers have questions regarding product location, quality,

and price. However, if there is no employee present to address these
concerns, the consumer is more likely to desert their shopping carts.
Designating employees for in-store assistance to welcome people and
answer questions shows customers the company values their business.

2. Customer Service
A major element to retail is providing excellent customer service. Retailers
that prioritize building customer relationships rather than pushing products
find greater success than those looking for a quick sell. Customers that feel
pushed to buy a product don't feel valued and often seek alternatives.
Employees should take a genuine interest in the buyer's problem and seek
the best possible solution.

3. Complaint Management

In the event where a customer makes a complaint, management should

stay calm and listen to their concerns. If the issue stemmed from poor
customer service, management should speak with employees to pinpoint
any problems. However, if the complaint concerns an item, employees
need to be well versed in the store's return and refund policy. Regardless
of the matter, it is important to assure the customer that their feedback is
appreciated and being taken seriously.

Retail processes, procedures, and profits all serve a higher purpose.As

the owner of a retail business the main focus should always be on increasing
profits. But, it does not mean that the retailer aims to make a killing from his
customers without providing all that much value in return.

Rather, the goal should be to drive profits so that the retailer can
then reinvest this money into the business — allowing him to provide
even more value to his customers over time.Whether aiming to minimize
operational costs or maximize revenues (or both), the retailer should
approach each stage of retail management strategically, and with a clear
rationale behind his decisions.This will create a profitable business that will
only continue to grow as time goes on.